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2007 (4) TMI 308 - AT - Income TaxPenalty u/s 158BFA(2) - Search And Seizure - penalty on the difference between the income returned and income assessed - HELD THAT:- In our opinion, penalty u/s 158BF A(2) is not mandatory. If the assessee offers a convincing reason or if any reasonable cause is demonstrated for non-inclusion of such income, the penalty is not attracted. In the case of Smt. Mala Dayanithi [2003 (11) TMI 280 - ITAT BANGALORE-C], held that addition not based on material found during search or material in possession of AO, but based on difference in valuation of property, as disclosed by the assessee and as estimated by the DVO, there was no concealment attracting penalty u/s 158BFA(2) of the IT Act, 1961. In the instant case there was an estimate at the level of the AO as well as at the level of CIT(A) in respect of net profit rate. From the entire facts of the present case, it would be clear that the income of the assessee was estimated and nothing has been brought on record by the AO that the assessee concealed any particulars of income. In our view, unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. While taking such a view, we are fortified by the decision in the case of CIT vs. Prem Das.[1999 (5) TMI 10 - PUNJAB AND HARYANA HIGH COURT]. In our opinion, the penalty u/s 158BFA(2) is almost in pan materia to s. 271(1)(c) of the IT Act, 1961, which relates to the concealment of income. The various Benches of the Tribunal have held that unless any positive concealment is found, no penalty is leviable on the addition made on estimate basis. In the case of Hari Gopal Singh vs. CIT [2002 (8) TMI 65 - PUNJAB AND HARYANA HIGH COURT], held that where the assessment is made on estimate basis, no penalty u/s. 271(1)(c) can be imposed. Thus, we are of the considered view that, no penalty u/s 158BFA(2) of the IT Act, 1961 can be levied in this case. Accordingly we cancel the penalty levied by the AO and confirmed by CIT(A). In the result, the appeal is allowed.
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